Report – German auto parts makers need to form joint ventures in China

According to a news report from Germany, three of the country’s car parts suppliers have been asked by China to form joint ventures.

According to Stefan Wolf, the chief executive of auto parts maker ElringKlinger, the three companies were told they can no longer rule independently over their Chinese units and need to form partnerships with domestic part makers.

“The Chinese state has told several (German car) suppliers that they are no longer allowed to operate their Chinese subsidiaries on their own but only as part of a joint venture in the future,” Wolf was quoted by the Stuttgarter Zeitung. “If that were to happen, it would be an attack on intellectual property. 50 percent of the company is being taken away – this, effectively, is expropriation,” he added. “I believe this is an attempt to make up leeway in terms of know how and innovation.”

The executive added that ElringKlinger was not among the companies that needed to look for local peers and declined to name the three part makers affected by the move. Recently, the local automotive business has been under heavy scrutiny from China’s National Development and Reform Commission (NDRC), which opened numerous probes to look into monopoly accusations from state media. Also this month, the European Union Chamber of Commerce in China said it’s concerned the antitrust investigations mainly target foreign companies.